Question: Please explain what 'maturity' is in contrast to 'duration'. How are the two concepts linked? Is the relationship one-to-one, as in a one-year extension in

  1. Please explain what 'maturity' is in contrast to 'duration'. How are the two concepts linked? Is the relationship one-to-one, as in a one-year extension in maturity automatically means a one-year extension on duration? Why or why not?
  2. Explain the concept of a bond's convexity. Please go into some detail, providing an example. What features of a bond tend to generate higher vs. lower convexity. From a bond owner's perspective, is convexity good or bad (defend your position)?
  3. Explain DV01. How is DV01 different from duration? Use an example. What kinds of market participants (retail investors, traders, hedge-fund managers, etc) tend to use DV01 in their decision making?
  4. How iscredit spreadrisk different from default risk on a non-government bond?

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